Thomas BabychanAccording to the latest data received from depositories in India, foreign portfolio investors and foreign institutional investors have so far invested more than 12000 crores in Indian capital markets in September.
From September 1st to September 16th, foreign portfolio investors pumped 12084 crore rupees into Indian equity markets.
Increasing trust in foreign investors toward the Indian market is considered to be the main reason for an increase in the flow of foreign investment.
Since October 2021 foreign portfolio investors and foreign institutional investors had been net sellers in the Indian equity markets. This has been due to the increasing outflow of foreign capital from the Indian markets. High volatility in the Global capital markets and increasing inflationary pressure in major Global economies forced portfolio investors and institutional investors to opt for safer trades.
After months of the massive net outflow of foreign Investments, portfolio investors and foreign institutional investors became net buyers in July 2022 with a net purchase of 5000 crore Indian rupees.
The performance of net inflow in foreign investments continued in August as net foreign investment touched 51200 crores.
Market experts believe that the renewed interest in foreign institutional investors and foreign portfolio investors is part of the strong resilience shown by the Indian economy and Indian capital markets.
After months of high volatility, the Indian equity market has been showing strong resilience towards the Global headwinds over the past few weeks. Strong earnings and performance posted by Indian companies in the first quarter of the current financial year and renewed interest of foreign portfolio investors & foreign institutional investors to invest in the country are seen as the major reason for the strong resistance shown by Indian equity markets.
Shrikanth Chauhan who is head of equity research at Kotak security told money control that the flow of foreign portfolio investors will remain highly volatile as monetary tightening and pricing inflation around the globe will have a major impact on the inflow.
Some market experts also suggest that the geopolitical crisis in Europe between Russia and Ukraine along with the possibility of a crisis between China and Taiwan is expected to keep foreign investment in the country at unsettled terms.
One of the major reasons which are being cited for the recent increase in the inflow of foreign portfolio investments is that FPIs are expecting the Central Banks across the globe to go soft on hiking interest rates.
To control the increasing inflation rates in economies, Central Banks across the globe have been following an aggressive interest rates policy which is against the interest of investors.